Daimler AG says Cerberus Capital Management LP is making new and "exaggerated demands" that have hampered Daimler's effort to sell its 19.9 percent stake in Chrysler Holding LLC to the private equity firm.

Daimler issued a statement today charging that "demands by Cerberus exceed the value of Cerberus' investment in Chrysler." Daimler sold 80.1 percent of Chrysler Holding to Cerberus in August 2007. That money went into the Chrysler business.

"The claims made now go beyond the framework of the contractually agreed possible obligations," the Daimler statement said. "Daimler rejects these absurd allegations."

Han Tjan, a Daimler spokesman, said talks over sale of the stake had slowed because of Cerberus' demands. He declined to elaborate on the allegations beyond the statement.

In September, Daimler announced it had been approached by Cerberus to sell its remaining stake. In October, Daimler wrote down the value of the stake to zero.

In its statement, Daimler said Cerberus also had made an "allegation of conduct outside the ordinary course of business by Daimler during the time between the signing and closing of the transaction."

Cerberus, in a statement, contends Daimler breached its obligations under contracts negotiated during the sale of the automaker last year.

"Cerberus and Chrysler have concluded that Daimler intentionally and materially breached its obligations under the relevant contracts relating to the Chrysler transaction.

"These serious breaches include, but are not limited to, misrepresentations relating to extraordinary changes in underwriting practices with regard to vehicle acquisition financing and leasing, as well as non-ordinary course lending and leasing practices."

The disagreement comes a week after Chrysler LLC CEO Bob Nardelli said in Congressional hearings that Cerberus would be willing to forgo any financial benefit if Congress delivered $7 billion to Chrysler as part of a $25 billion loan package. Terms of a possible loan are being negotiated.

PRESS RELEASE: Negotiations on Redemption of Chrysler Shares More Difficult

STUTTGART, Germany, Nov. 26 /PRNewswire-FirstCall/ -- The negotiations between Daimler AG (stock exchange abbreviation DAI) and Cerberus Capital Management LLC on the redemption of Daimler's 19.9% shareholding in Chrysler Holding LLC ("Chrysler") and other issues related to Cerberus's investment in Chrysler have been made considerably more difficult during the last weeks due to exaggerated demands by Cerberus.

These demands by Cerberus exceed the value of Cerberus' investment in Chrysler. For the acquisition of an 80.1% stake in Chrysler, Cerberus had invested USD 7.2 bn. The claims made now go beyond the framework of the contractually agreed possible obligations under representations and warranties. The new claims also include an allegation of conduct outside the ordinary course of business by Daimler during the time between signing and closing of the transaction as well as the allegation of incomplete information about the business. Daimler rejects these absurd allegations and the claims derived therefrom as being completely without substance.

PRESS RELEASE: Cerberus Capital Responds to Daimler Press Release

NEW YORK, Nov. 26 /PRNewswire/ -- Cerberus Capital Management, L.P. ("Cerberus"), one of the world's leading private investment firms, issued the following statement in response to Daimler's press release disseminated this morning.

"Cerberus and Chrysler have concluded that Daimler intentionally and materially breached its obligations under the relevant contracts relating to the Chrysler transaction. These serious breaches include, but are not limited to, misrepresentations relating to extraordinary changes in underwriting practices with regard to vehicle acquisition financing and leasing, as well as non-ordinary course lending and leasing practices.

"This conduct, among other reasons, led the parties to engage in lengthy negotiations toward a mutually agreeable settlement. Daimler has, unfortunately, refused to recognize the gravity of the claims relating to its deliberate conduct that resulted in the impairment of Chrysler's business and added to and multiplied the adverse effects of the current automotive and macro-economic environment. We are disappointed that Daimler has refused to negotiate in good faith in the face of the plain facts of which they are well aware. Accordingly, we are considering our strategic options and will have further comment after assessing the effects of Daimler's recent actions."

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So now Cerberus didn't know how Chrysler was doing? If they think anyone believes that they're just a bunch of idiots. I'm 100% sure pre-acquisition due dilligence was performed, and if by any chance it wasn't the only ones to blame are Cerberus... Idiots!